Tangshan Mining Borrowed $100,000 for One Year Under a Line

question 74

Multiple Choice

Tangshan Mining borrowed $100,000 for one year under a line of credit with a stated interest rate of 7.5 percent and a 15 percent compensating balance. Normally, the firm keeps a balance of about $10,000 in its checking account. Based on this information, the effective annual interest rate on the loan is ________.

• A) 7.89%
• B) 8.05%
• C) 8.89%
• D) 7.29%

---

Definitions:

Sample Mean

The average value computed from a sample of a population, used as an estimate of the population mean.

Population Mean

The population mean is the average of all the values in a population. It is a measure of central tendency that summarises the characteristic of the entire population.

Magnetic Resonance Imaging (MRI)

A medical imaging technique used in radiology to form pictures of the anatomy and the physiological processes of the body.

Ligament Sprains

Injuries involving the overstretching or tearing of the ligaments, the fibrous tissues that connect bones and stabilize joints.